Lord Glasman on the Co Op

The horrible phrase used by people like me is a “multi-stakeholder model” of governance in which those with an interest in the flourishing of the institution, like workers and users, are organised and sit on the board. They have the expertise and experience to hold unaccountable elites to account. A third of the seats on the Co-op board should have gone to users and workers so the institution could not be captured by the self-interest of its managers, who pay themselves and develop strategy in their own interest. This is a model that could be usefully adopted throughout our policy and economy: a third of seats for funders, a third for workers and a third for managers to negotiate a balance of interests. It works well in Germany in public and private sectors. Such a “partnership” model could restore trust and integrity, as well as give incentives to participation and responsibility.

Super. So we’re going to put more non-bankers on the board of a bank and hope that this results in better banking, are we?

13 comments on “Lord Glasman on the Co Op

  1. “Multistakeholder model”. Does that mean you get to do alternate lines with the likes of Rev Flowers? The Wail has some truly fabulous accounts of what the archnonspecialist got up to on both his and the Coop’s time.

  2. I think they have thrown in a few extra letters (u,l,t,h,o,l,d,e) which are there just for obscurity.

    Multistakeholder model

  3. With ketamine, crystal meth & cocaine the co-op bank already operated an effective multi stash-holder model.

    Of course Lord Glasman’s talking nonsense: in Germany employees are only represented on the Aufsichtsrat, the supervisory board.

  4. The German employee board model would restore integrity? Is he having a laugh? Didn’t that end up with companies paying prostitutes to keep the employee representatives on-side?

  5. The bloke is a moron.

    Customers do not need representation – they can go elsewhere.
    Workers do not need representation – they can get a job elsewhere.

    The board exists to do the bidding of the company’s owners – those shareholders that have chosen not to go elsewhere, but to provide their capital to allow the employees to meet the needs of the customers.

  6. I wonder if his Lordship has ever read Henry Hansmann’s book “The Ownership if Enterprise” to discover why particular ownership and governance structures occur in particular situations and why we don’t see multi-stakeholder models of ownership or governance in reality.

  7. England is a strange place.

    You have people with the title “Lord” raging about “unaccountable elites”.

    Isn’t “unaccountable elite” the definition of “a Lord”?

  8. I think this bloke needs to look across to Germany where this type of governance arrangements has been in place for quite along time.

    Did it help them avoid the financial crisis. Of course not. In fact most of the Landesbanken are pure zombies surviving on cheap credit from the ECB.

    If you want to change the structure and governance of banking force the merchant/investment banks to go back to the old model of partnership. Do you think that if Lehmann management knew that their entire net worth was on the line and that they were personally liable if the whole thing went bang that they might have had a different approach?

  9. Hmm. I’m slightly contrarian here. Since the problem is that the people who sit on bank boards have been distinctly lacking in knowledge of banking, it strikes me that having a few “workers” on the board might improve things. The people who work in banking do tend to know something about it.

  10. Oh, and Tim, giving bank workers and managers seats on the board is not by any stretch of the imagination putting “more non-bankers” on the boards of banks. Giving accountants, engineers, retail executives, ministers of religion and politicians seats would be – but we already do that.

  11. @Richard, to be a pendant that was bribery of the members of the Betriebsrat, not the Aufsichtsrat. The Betriebsrat consists of management plus workers representatives, and its main role is to negotiate workers’ T&C and deal with disciplinary stuff. So its members are wide open to bribery.

  12. @ Frances Coppola
    In one sentence Lord Glasman wants one-third of the Co-op board seats to go to “users” (customers), in the next, for general companies it is “workers”. I think customers are generally non-bankers.

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